Developed By: iNFOTYKE
By H H Mohrmen
The BJP led government has only completed two years of its five- year term and if we are to judge the reaction of people particularly to the demonetization of the one thousand and five hundred currency notes, then it seems that citizens of this country have some faith in this government and are willing to bear the short term pain, in the belief that it has a long term benefit. I am no economist but with the little economics I learnt in college I can see that Modi has introduced a whole slew of measures to improve and revitalise the country’s economy. So if we are to judge his performance we have to look at the bigger picture and not single out one issue.
Modi has only ushered in some policies and schemes to revitalize the economy and the first of the economic measures that he had introduced was the Jhan Dhan Yojna which encourages every Indian to open a no frills bank account without the common man having to deposit any money.
It is true that for villages which implement the MNREGA, the scheme had an inbuilt mechanism requiring every job card holder to open at least one bank account per household, but that’s about it. The accounts opened under MNREGA are used for withdrawing of wages only and nothing else. In some villages the job card holders thinks that the account can be used only for the single transaction of withdrawing wages. The faith-based organisation (FBO) with which I am involved has conducted more than fifty financial literacy campaigns (FLCs) throughout the length and breadth of West Jaintia hills district. The FLCs Supported by NABARD and RBI were conducted in collaboration with banks like Canara, Punjab National, Indian Overseas, Meghalaya Rural bank and MCAB and it has helped us understand a wee bit about the economic situation in the villages. One thing that we immediately learned is that saving habits are still dismally low in many villages. In some places we were even asked, how we can expect people to save when they are unsure of having two square meals a day? We also came across stories of elderly people keeping their money in a jar and burying it in the ground. I can’t say how much Jan Dhan has helped but I know many people would not have opened any account at all if it was not for this scheme. And whether the account holders operate the accounts on a regular basis or deposits any money in the account or not is another question.
The opening of bank branches in many towns and big villages has also introduced the banking habit among the citizens of the country. The introduction of bank mitra or banking correspondents in big villages has helped the banks to provide financial services at the door step of the common man. One hopes that banks would engage more bank correspondents (BC) in many more villages with population of more than two thousand (as mandated by RBI) to ensure that common people have access to the banking system. I am not sure if there are many takers of Pension schemes for the common people introduced by the this government (especially in Meghalaya), and both life and accidental insurance introduced by this government is not popular in the state because the tribals, especially the Khasi-Pnar despise the idea of insuring one’s life. They still consider it bad luck to insure one’s life because it is like a self- imposed misfortune on oneself.
Then the government introduced Mudra loan to encourage entrepreneurs who wish to start small business. As far as I can gather many young and first generation entrepreneurs have availed the opportunity. One such case is that a young man from Padu who was sent for training by the District Basin Development Unit of West Jaintia hills and on completing the training started a small food processing unit in his own village. Later on Neta Pohthmi availed loan from Mudra Bank to increase production. Then the central government has also introduced Start up India which is yet to be made popular in the state.
Then demonetising of one thousand and five hundred notes happened and caught everyone by surprise. I am not saying that the move did not cause any hardship to the common people. There are problems and people have to queue for hours together. Shops even those as big as Legacy bakery in Shillong refused to take the demonetised notes in spite of the RBI guidelines. I argued with them and reminded them to read the RBI instruction which allow fifty days window period for anybody to exchange the notes but to no avail. The other question is what is the percentage of common people hold ATM cards and how many villages which are far from the nearest banks have a BC near the village to exchange their currency notes which are no longer legal tender?
I am not going to repeat on how people had to endure hardships, standing in a queue for hours together to deposit or withdraw money, but I am going to share a story which happened in a small town where I live. The day after Prime Minister Modi made his announcement to demonetise the currency also happened to be a market day in Jowai and like anywhere else farmers from the villages came to sell the products in the market. On that day both the seller and the buyers were in a fix. It was a situation where the seller wants to sell and the buyer also wants to buy, but could not do any trading, not for dearth of money but because the common currency notes ceased to become legal tender. It was for the first time that no transaction happened despite both money and commodities are available in plenty.
Much has been said about the poor having to bear the brunt, but is that true? My friends in the village told me that the villagers can at least survive for some days without money because they still have rice in their granary, vegetables in their gardens and their domesticated animals; it is not like they are going to starve the next day if there is no money. Perhaps the demonetisation has immense impact on the poor in the town and cities and the middle class people.
There were also complaints that in some banks there were double standards in the way they treated people who visited the banks. But banks are business entities too and they have their preferential list of customers. Initially, all banks offered the exchange facility to their account holders and only later attended to non-account holders. The demonetisation also had little or no impact on the people who have multiple banks accounts.
Since the goal of the entire exercise is to do away with black money, the other question that begs an answer is how we can get rid of black money? I asked a banker how would we be able to distinguish black money from white since people like us are also surrendering the demonetised notes to the banks? He thinks that only when people deposit huge amounts of money will the money be considered black. But at the end of the day it is irrelevant if black money is recovered or not but at least the government will be able to estimate the amount of money in circulation. The measure begs us to look at the big picture. It also begs us to look at the slew of measure the government had introduced in its totalilty and not to single out one issue.
The goal of the government is financial inclusion and revitalising the sluggish economy. To achieve that it has introduced many economic measures. If the demonetisation of the two currencies would have any impact on the economy is to revitalise the economy. But Modi’s major achievement in the entire process is ‘modivation.’ How the Prime Minister is able to motivate almost the entire nation to support him in his move is something that we all need to ponder hard. So the question is: how is a man who was once a mere tea seller able to sell his dream to the majority of Indians who supported him in the demonetizing of the two currency notes. Ultimately irrespective of whether the country will benefit from the measure or not, if the government or whether Government is able to unearth black money or not, what is important is the immense faith that people have on the government and the hardship that they are willing to endure to support its activity. That is important.